Today we placed the following orders in the PEA Picker portfolio at Terry’s Tips (this is the portfolio that has enjoyed eight consecutive gaining plays without a loss).
May 21, 2013 Trade Alert – PEA Picker Portfolio – LIMIT ORDER
I wrote a Seeking Alpha article about this play if you are interested – How To Play The Salesforce.com Earnings Annou…
In this article I suggested buying June options for the long side but I have since noticed that the July options are less than $.50 more expensive and seem to have tighter bid-ask ranges. These spreads should make a gain in either direction as long as the stock fluctuates less than 10% in either direction (from its current price of $46.50) after the announcement, assuming that IV of the July options will only fall by 8 (from 36 to 28):
BTO 8 CRM Jul-13 50 puts (CRM130720P50)
STO 8 CRM May4-13 47.5 puts (CRM130524P47.5) for a debit limit of $2.48 (buying a diagonal)
BTO 5 CRM Jul-13 50 calls (CRM130720C50)
STO 5 CRM May4-13 50 calls (CRM130524C50) for a debit limit of $.78 (buying a calendar)